Statutory Sick Pay and Protection for Workers

Debate between Chris Stephens and Rachel Reeves

Wednesday 18th March 2020 Commons Chamber

[Chris Stephens (Glasgow South West) (SNP)]

Does the hon. Lady agree that as workers have had their shifts cancelled, or have been told that their hours will be reduced—many of them are on zero-hour contracts—they, too, need the support that she is rightly saying should be given to workers?

[Rachel Reeves]

The hon. Gentleman is right. For many people, if they have a temporary reduction in their work, they can draw on their savings, but many of the people I represent—and many of his constituents as well—do not have savings to draw on. The Resolution Foundation published evidence last week before the Budget—to try to influence the Budget—that showed that 60% of people on low and middle incomes have less than £100 of savings. They do not have the resources to draw on even temporarily for a short time to pay the rent or the mortgage, or to put food on the table.

We must offer more support. That is what other countries are doing. In Norway, full pay is given to those laid off for 20 days. The self-employed get 80% of their average income over the last three years. In Sweden, laid-off workers are guaranteed 90% of their income: the Government will pick up half of that and employers are expected to pick up the other half. In Denmark, the Danish state will pay 75% of the salaries of laid-off workers. That is the same in many other countries. If it is good enough in Denmark, Sweden, Norway and other countries in the European Union and elsewhere, it is frankly good enough for workers in this country too.

It is now urgent that the Government come to the House and tell us that support is not just available for business—although that is very welcome—but is available to workers as well. Unless that happens, people will not be able to self-isolate and stop the virus spreading. The health crisis will become an economic crisis and many people will pay the price for the virus. It does not need to be that way. Let us look at income replacement, and quickly, to ensure that help is available.

As important as helping people now is, if we put in place income replacement so that people are not laid off or made redundant, it will also support the economic recovery. The pandemic will pass—we must believe that and we know it is the case—but when it does, and people want to go out again and to start spending in shops, restaurants, bars, theatres and cafes and to travel on aeroplanes, we need to ensure that the economic fabric of our country is still intact. The best way to do that is to ensure that workers remain attached to the firms that have been employing then. Income replacement can help people now, but it can also ensure that our economy gets back on a sound footing when the crisis has passed. To build the economy we need to see after this, I urge the Government to introduce urgently a system of income replacement.

The issue of renters has also been mentioned by Front Benchers and others. There was support yesterday for people with mortgages, and that is very welcome, but many people, especially those in precarious work or on low pay, do not have mortgages—they rent privately or in the social sector. In my constituency, fewer than a third of homes are owner-occupied; the others are either in the private rented sector or the social rented sector, and we need to do much more to support those people as well, because if they are on statutory sick pay now, or have seen a fall in their incomes or are expecting to be made redundant, frankly they are not going to be able to pay their rent in the days and weeks ahead. It was welcome that the Prime Minister said there will be support for renters, but we need to see the detail of that, and we need to see that support coming directly to landlords and renters to ensure that nobody is penalised because they do not have the money to pay their rents right now. That requires support for local authorities, who are big letting agents, and big providers of social housing; the support needs to go to the housing associations too and also large landlords, and we should be working with local government to ensure that we are reaching and talking to the biggest letting agencies and estate agents to make sure that support is getting to the people on the ground.

Again, I cannot stress enough how important this is; this action is needed urgently. The representative of the hospitality sector said last night that we are staring at hundreds of thousands of redundancies in that sector alone, so income replacement and support for people in the rented sector is crucially important.

The support for mortgages is a three-month holiday, and I say again that I am not sure that that is the right approach in the private rented sector, because a three-month holiday on a person’s mortgage which can then be added to their mortgage debt is one thing, but if in three or four months’ time someone has four months’ worth of rent to pay, that is not going to be much good if they have found their incomes have not recovered by then. We therefore need to be sensitive about ensuring that the support is there for the period of time that it is needed for.

Finally, I want to say something about gas and electricity and broadband and television licences. These are all essential services for people, and they will be more essential in the weeks and days and months ahead as more people are having to stay at home. Broadband is now absolutely an essential service, because the only way that many people can get food delivered is by ordering online. Again I urge Ministers to say to the providers of those essential services that nobody should be cut off from those essential services as long as the pandemic lasts, because otherwise people will find themselves without the basic infrastructure to be able to stay in their homes.

This global pandemic has thrown into sharp relief some of the problems in our labour market and in our social security system, so when this is all over we cannot go back to business as usual. If people cannot survive on £94.25 statutory sick pay when there is a global pandemic, they cannot survive on £94.25 at any other time, so we need to look at the waiting time for universal credit and the level of statutory sick pay, and who is eligible for it, and also, frankly, how our labour market works. We have 1 million people on zero-hour contracts and we have almost 5 million people who are self-employed—some choose to be, but many have no choice—so we need to look at how our economy works and who it works for, because whether we are in the midst of a global pandemic or not, there are too many people in our country that our economy, our labour market and, frankly, our society do not work for.

Carillion

Debate between Chris Stephens and Rachel Reeves

Thursday 12th July 2018 Commons Chamber

[Rachel Reeves]

My hon. Friend makes an important point. The people who rely on audit are the shareholders, and also the small businesses that supply the company, the people who work there and the pensioners who have saved for their pensions with that business. But they are not the people who employ the auditor, and they are not the people the auditors are accountable to. The auditor is accountable to the audit committee of the business, and it is often appointed by that committee on the advice of the chief financial officer. So, as my hon. Friend says, the incentives are all wrong.

I am pleased to see that our report has prompted some long-overdue soul searching in parts of the audit profession. While the written reactions of the big four accountancy firms to our report differed, they all seem to recognise that there were issues to be addressed. The Institute of Chartered Accountants in England and Wales has recognised this as a watershed moment, and it is leading a review of the audit profession. I hope that that review will propose some radical solutions. We have now referred the audit market for investigation by the Competition and Markets Authority. The new chair of the CMA, Lord Tyrie, was endorsed in his role by the Business, Energy and Industrial Strategy Committee, and he should now demonstrate the same determination he showed in this place leading the Parliamentary Commission on Banking Standards when he looks at the future of the audit market. I am convinced that we have to find a way of making the audit market more competitive and audits themselves more trusted, and of ending the conflicts of interest that can damage the reputation of some of our economy’s major firms.

Behind the company and its auditors and advisers, there are statutory regulators who should have been expected to step in when the business and the audits were seen to be failing. Carillion’s finance directors and auditors were subject to scrutiny by the Financial Reporting Council. Now that the company has collapsed, two former CFOs are under investigation for the preparation of financial statements, and Carillion’s auditors are subject to further scrutiny. During our inquiry, we heard that the FRC had already taken an interest in the situation at Carillion, and that it had concerns about the quality of previous audits by KPMG. However, the regulator had been far too passive. It accepted extra disclosures being made by KPMG and Carillion the following year without any further follow-up action and, although it found repeat issues with KPMG’s wider audit work across other companies, it seemingly took no firm action there either.

Carillion’s huge pension debt was a matter of concern to its pension trustees and the Pensions Regulator, the other regulator involved, but the regulator’s response, again, was feeble. It threatened to impose a contributions schedule and then left the power unused. It sought to negotiate a payment agreement and then agreed precisely with what the company wanted. It launched action only once the company collapsed and then it was too late. Again and again, the Pensions Regulator barked but did not bite. While plugging the £2.6 billion hole in the pension fund would not have saved the company, it could have reduced the largest ever burden on the Pension Protection Fund, which will see pension holders receive less than they have been promised by their company’s scheme. It is telling that none of Carillion’s directors was in the collapsed scheme.

The Committees found serious concerns about the performance of both regulators, including their powers, remit and leadership. If regulators are not working well, employees, investors, suppliers and customers can have little confidence in the businesses in which they are invested. Statutory regulators need to be doing more. Across the work of the Business, Energy and Industrial Strategy Committee, we rarely find ourselves criticising regulators for being too bold. Instead, we keep hearing timid bodies apologising for letting consumers down. That needs to change, and the change should be led from the top.

[Chris Stephens (Glasgow South West) (SNP)]

The hon. Lady is making an excellent speech so far. Does she agree that one of the Committee’s concern was that the companies that were being taken over all had sick pension schemes and that the Pensions Regulator should have been asking serious questions at that point?

[Rachel Reeves]

The hon. Gentleman, who sits on the Work and Pensions Committee, is absolutely right. When Carillion took over companies such as Mowlem, McAlpine and Eaga, it was taking on businesses, yes, but it was also taking on huge pension deficits, which contributed to the problems. However, the business could have decided to address that pension deficit. It was not that nothing could be done. It could have decided to pay money into the pension fund instead of paying out to shareholders and to directors in the form of bonuses, but it decided to do the exact opposite. It made the wrong choices and prioritised the wrong people. It prioritised itself.

The announcement of the Kingman review into the FRC is a welcome start, but the Government must confirm that they are willing to see radical change, including giving regulators more powers if needed and holding them better to account for not using the powers they already have.

The Government, the audit profession and the regulators need to take urgent action. They owe it to the tens of thousands of people affected by Carillion’s collapse and to the untold number of people who could be affected if this is ever allowed to happen again. There are some clear lessons. In contracts, best value is not the same as the lowest price. Outsourcing is not always better than doing things in-house. Privatisation does not mean that the risk or the cost of failure when things go catastrophically wrong are contracted out.

We would all like to think that this is a case of one horrendously badly run company—Carillion was horrendously badly run—but with Interserve, Capita and Mitie all facing difficulties, we would have to be pretty brave to conclude that this is a one-off. We need to restore integrity to British business and the firms that audit them. Six months on, we have regulators reviewing and reviews of the regulators, but we need firmer action on corporate governance, on breaking up cosy cartels and on toughening up sanctions for misconduct. To secure our public services, for jobs, for small business, for contractors and for pensioners, that action is needed and it is needed now.